Forbes_USA_June_13_2017

Whey to go:
Leprino’s new
factory is rolling out
its first direct-toconsumer
product,
a protein powder
called Ascent.
adds. “My job is to hold them responsible for doing what they
said they’re going to do.”
He wasn’t always so hands-off. While acknowledging his
“genius,” numerous industry executives paint Leprino, in his
younger days, as an “aggressive” leader who wasn’t above visiting
individual franchise owners to pitch his technologically
advanced cheese. But very few will go into detail, and fewer
still will attach their name to their comments. One pizza entrepreneur
puts it this way about the man who owns 100% of
this mozzarella giant: “Jim Leprino is a very powerful man.”
LEPRINO’S OFFICE BEARS testaments to his roots, including
a black-and-white photo of his mother on her wedding
day at age 16 and a bronze relief of James and his father rolling
fresh mozzarella balls. Leprino Foods’ genesis lies in the mountains
of southern Italy, which Mike Leprino Sr. left in 1914,
at age 16. Accustomed to high altitude, he settled in Denver;
without much of an education or the ability to read and write
English, he began farming. More than three decades later, in
1950, he finally opened a grocery store to sell the produce he
grew. Italian specialties followed, including fresh ricotta, mozzarella
balls and ravioli made by James’ sister Angie.
Meanwhile, James, the youngest of five children, noticed
his classmates spending free time at neighborhood pizza
joints. After graduating high school in 1956, he started working
with his father full-time and shared a revelation: “Pizzerias
in this part of the country were buying 5,000 pounds of
cheese a week,” he recalls. “I thought, This is a good market to
go after, so I did.” In 1958, after larger chain grocery stores had
forced the Leprino market to close, the Leprino Foods cheese
empire started with $615.
The timing couldn’t have been better. That same year, the
first Pizza Hut opened, in Wichita, Kansas. A year later, Mike
and Marian Ilitch opened the first Little Caesars, outside Detroit.
Another year went by, and Domino’s began delivering
pizza, in Ypsilanti, Michigan. Frozen pizzas, introduced after
soldiers returned home from WWII craving slices, were also
gaining popularity. After two years in business, Leprino Foods
was delivering 200 pounds of block mozzarella a week to local
Italian restaurants.
Leprino realized he needed to learn the science behind making
cheese on a mass scale. But with a young daughter at home
and another baby on the way, he didn’t have time for college. Instead,
he hired Lester Kielsmeier, who had run a cheese factory
in Wisconsin only to find out that it was sold during his stint
in the Air Force during World War II, because his dad believed
he’d been killed in action. “When Lester came, I went downtown
to the junkyard and I bought a couple bigger cheese vats
to make it look like we were really in the business,” Leprino says.
Leprino’s first coup came in 1968, when Pizza Hut was
looking for a supplier that could help it cut costs while standardizing
portions. After hearing that shredding 5-pound
cheese blocks in the franchises was time-consuming and inconsistent,
Leprino Foods started selling frozen, presliced
blocks. For the first time, pizza-makers could simply layer a
few slices onto each pie.
While Kielsmeier made the cheese, Leprino fixated on efficiency.
He quickly realized he was dumping half his raw ingredients
into the river in the form of whey, the calcium-rich liquid
left over after curds are strained. Inspired by the 1964 World’s
Fair in New York, Leprino traveled to Japan to meet with scientists
using milk proteins derived from whey to help the Japanese
population grow taller. More than a half-century later, Leprino
Foods remains the largest U.S. exporter of lactose, a by-product
of sweet whey, and retains a large market share in Japan.
On the cheese side, Leprino hustled to satisfy Pizza Hut,
which went public in 1972 with around 1,000 stores and, at its
peak in the 1990s, accounted for 90% of Leprino’s sales. Pizza
Hut franchises would sometimes wait too long to thaw the presliced
mozzarella and reported that their cheese would crumble,
so Leprino Foods responded with its first major breakthrough:
a preservative mist. The scientists there soon realized that this
method allowed them to add flavors such as salted caramel and
jalapeño. They could even make a reduced fat “cheddar” by
using a mozzarella base and then misting on cheddar flavor and
orange food coloring. Leprino Foods’ production rose sixteenfold,
to 2 million pounds of cheese a week.
JUNE 13, 2017 FORBES | 103